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DALAM MAHKAMAH RAYUAN MALAYSIA

(BIDANG KUASA RAYUAN)

RAYUAN SIVIL NO.: W-02(NCVC)(W)-975-06/2015

ANTARA

GERARD JUDE TIMOTHY PEREIRA (NO. K/P: 550926-71-5103) … PERAYU

DAN

KASI A/L K.L PALANIAPPAN (NO. K/P: 581025-10-6855) … RESPONDEN

[DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR

DALAM WILAYAH PERSEKUTUAN, MALAYSIA

WRIT SAMAN NO. 22NCVC-662-05/2012

ANTARA

GERARD JUDE TIMOTHY PEREIRA

(NO. K/P: 550926-71-5103) … PLAINTIF

DAN

KASI A/L K.L PALANIAPPAN

(NO. K/P: 581025-10-6855) … DEFENDAN]

KORAM:

LIM YEE LAN, JCA

VARGHESE A/L GEORGE VARUGHESE, JCA

IDRUS BIN HARUN, JCA

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GROUNDS OF JUDGMENT

Introduction

[1]. This is the Appellant’s appeal against the decision of the Kuala

Lumpur High Court dated 14.4.2015 in dismissing the Appellant’s

claim against the Respondent.

[2]. The Appellant was the Plaintiff and the Respondent was the

Defendant at the High Court. In this judgment, we will refer to the

parties as they were in the High Court.

Brief Facts

[3]. The Plaintiff’s claim at the High Court was for the return of a sum

of RM2, 670,000.00 given by him to the Defendant as personal loans.

[4]. The Plaintiff’s pleaded case was that the said sum was effected

under various payments made through telegraphic transfers between

the years 2008 and 2009 (hereinafter collectively referred to as

“Friendly Loan”).

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[5]. The Plaintiff sent two notices of demand to the Defendant for the

return of the Friendly Loan, the first in September 2011 and the

second in May 2012, but there were no replies to the said notices.

[6]. The Defendant in his defence admitted receipt of the various

payments but denied that it was for a Friendly Loan and the Plaintiff

was put to strict proof thereof.

[7]. The case went on a full trial during which the Plaintiff and the

Defendant testified on their own behalves. No other witness was

called by both parties.

Decision of the High Court

[8]. At the conclusion of the trial, the learned trial judge dismissed the

Plaintiff’s claim with costs of RM 20,000.00 on the ground that the

Plaintiff failed to prove on a balance of probabilities that the said sum

was for a Friendly Loan.

[9]. Briefly the decision of the learned trial judge was premised on the

following findings of fact and law:

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(1) There was no documentary evidence that the payments made

were in the nature of friendly loans except for the oral testimony

of the Plaintiff. The Court of Appeal’s decision in Tan Aik Teck

v Tang Soon Chye [2007] 6 MLJ 102, relied on by the Plaintiff,

does not establish a general principle of law that, where the

existence of a friendly loan was alleged, all that the party

bearing the evidential burden needs to show is the fact of

payment and receipt, which thereafter places the evidential

burden on the other party to show that the payment was for

some other purpose. Hence, it was not sufficient for the Plaintiff

to presume the existence of a loan merely by proving the fact of

payment by the Plaintiff and receipt by the Defendant;

(2) The letters from the Plaintiff dated September 2011 and May

2012 requesting for the return of the loans were

inconsequential and cannot be evidence of a Friendly Loan,

even though the Respondent failed to reply, since it was issued

more than 2 years from the date the payments were made and

were most likely made with intention of litigation. The case of

Wong Hong Leong David v Norazman Bin Adnan [1995] 3

MLJ 283 cited by learned counsel for the Plaintiff (“Plaintiff’s

counsel”) is distinguishable based on the facts;

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(3) The Settlement Agreement that was entered into between the

parties meticulously dealt with not only the distribution of the

assets of the joint venture but also the apportionment of

liabilities. Yet it did not deal with, let alone acknowledge, the

existence of any outstanding loans from the Plaintiff to the

Defendant arising from the payments that were the subject

matter of the dispute.

The Appeal

[10]. The Plaintiff appealed against the decision of the High Court and it

came before us for determination. During the hearing before us,

respective counsels had filed in written submissions supplemented by

their oral submissions. We will allude to their submissions in the

course of this judgment.

Decision of this Court

[11]. At the conclusion of hearing this appeal, after having taken into

consideration the oral and written submissions of learned counsels

and perused the Record of Appeal, we allowed the Plaintiff’s appeal

with costs and set aside the order of the High Court.

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[12]. The Defendant has applied for leave to appeal to the Federal

Court against our decision. We set out the reasons for our decision in

allowing the appeal.

Reasons for this Court’s decision

[13]. We were keenly aware that as a general rule an appellate court

should be slow to interfere with the findings of fact of a trial court

unless the findings were arrived at with no or insufficient judicial

appreciation of the evidence before it to render such findings plainly

wrong; or the findings were the result of a misdirection by the trial

court on the applicable law or there was a wrong application of the

law to the facts; or the findings were of a kind which a reasonable

court similarly circumstanced which had properly directed itself and

asked the right questions would not have arrived at (see: China

Airlines Ltd. v. Maltran Air Corp Sdn Bhd. & Another Appeal

[1996] 3 CLJ (FC); Lee Ing Chin @ Lee Teck Seng & Ors v Gan

Yook Chin & Anor [2003] 2 MLJ 97 (CA); Gan Yook Chin (P) &

Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1 (FC);

Sivalingam Periasamy & Anor v. Periasamy & Anor [1996] 4 CLJ

5459).

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[14]. In the present case, we were persuaded by the Plaintiff’s counsel

that the learned trial judge had committed the following errors of law

and fact which rendered his findings plainly wrong and warranted

appellate intervention.

That Plaintiff failed to prove his claim on a balance of probabilities

[15]. In dismissing the Plaintiff’s claim under this ground, the learned

trial judge held that under sections 101 and 103 of the Evidence Act

1950, the Plaintiff bears both the legal and evidential burden of

proving his case on a balance of probabilities.

[16]. The learned trial judge was of the view that the Plaintiff in this case

had failed to discharge his evidential burden of proof that the

payments made to the Defendant were pursuant to a Friendly Loan.

This is because apart from the receipt of the moneys by the

Defendant and the Plaintiff’s two letters of demand, there was no

documentary evidence that the payments made were in the nature of

loans except for the oral testimony of the Plaintiff.

[17]. Before us, Plaintiff’s counsel submitted that the learned trial judge

erred in holding as such. It was submitted that it was not in dispute

that there was no formal agreement between the parties describing

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the purpose for the payments. Nevertheless, the Plaintiff had testified

that the transfer and receipt of such monies by the Defendant was for

the purpose of a Friendly Loan based on the verbal requests of the

Defendant. These facts, together with the fact that the Defendant had

never at any time denied that the payments made to him were for a

Friendly Loan as evidenced by his non-reply to the Plaintiff’s two

notices of demand, were more than sufficient, in the circumstances of

this case, to prove on a balance of probabilities that the payments

were made by the Plaintiff and received by the Defendant as a

Friendly Loan and for no other purpose.

[18]. In support of his contention learned counsel had cited the

decision of this Court in the case of Tan Aik Teck v Tang Soon

Chye (supra) in which this Court, based on similar evidence as in

the present case, had allowed the Plaintiff’s claim.

[19]. The facts in Tan Aik Teck v Tang Soon Chye which were said to

be similar to the present case were (i) there was no formal loan

agreement between the parties; (ii) the alleged friendly loan was

given to the defendant via two cheques issued by the plaintiff; (iii) the

defendant admitted that he had banked the cheques into his account;

(iv) the plaintiff issued a notice of demand for the return of the friendly

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loan through his solicitor two years after the issuance of the cheques ;

(v) there was no reply by the defendant to the said notice of demand.

[20]. It was submitted that based on those facts, this Court in Tan Aik

Teck v Tang Soon Chye was prepared to accept that the plaintiff

therein had adduced sufficient evidence to discharge his evidential

burden of proof that the money advanced to the defendant through

the two cheques was for purpose of a friendly loan.

[21]. In holding that the plaintiff therein had proven his claim on a

balance of probabilities, Mokhtar Sidin JCA, delivering the judgment

of the court held, inter alia, as follows:

[2] The plaintiff admitted that there was no loan agreement

in respect of the loan given to the defendant. The loan given could

only be proved by the two cheques which were paid into the

defendant’s account and also the admission by the defendant that

he had put the money into his bank account. Since the defendant

had admitted that he had received the two cheques and had

credited them into his account, I am of the view that the plaintiff had

discharged his burden that the money was a loan unless proven

otherwise by the defendant. As such, the burden is on the

defendant that the money given to him by the plaintiff was not a

Friendly Loan.

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[22]. It was submitted that likewise in the present case, where the

facts were very similar to the facts in Tan Aik Teck v Tang Soon

Chye (supra), the learned trial judge ought to have held that the

undisputed payment and receipt of the moneys by the Defendant,

coupled with his non-reply to the two notices of demand, constituted

sufficient evidence to discharge the Plaintiff’s evidential burden of

proof that the payments were made for the purpose of a Friendly

Loan, on a balance of probabilities. In other words, the learned trial

judge ought to have found that the Plaintiff had on the evidence

established a prima facie case of a Friendly Loan and the burden

was shifted to the Defendant to prove otherwise, which he had

failed to do so.

[23]. We however observed that the learned trial judge’s rejection of

the decision in Tan Aik Teck v Tang Soon Chye (supra) was

based on the footing that this case did not establish a general

principle of law that, where the existence of a friendly loan was

alleged, all that the party bearing the evidential burden needs to

show is the fact of payment and receipt, which thereafter places the

evidential burden on the other party to show that the payment was

for some other purpose.

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[24]. We were of the considered view that the learned trial judge’s

finding was based on his own misconstruction or misunderstanding of

the Plaintiff’s counsel’s submission. We did not see in his submission

any suggestion by learned counsel that Tan Aik Teck v Tang Soon

Chye had laid down such a general principle of law and the learned

trial judge was bound by the said principle of law.

[25]. As pointed out by the Plaintiff’s counsel, the present case before

us is a very simple case. We are here talking about a transaction

involving the passing of moneys from one experienced businessman

to an equally experienced businessman of equal standing. One party

alleges that the moneys were made as personal loans while the other

party, while admitting the receipt of moneys, denied they were loans.

He however did not respond to the demands for the return of the

moneys nor did he offer any explanation or excuse as to the real

purpose for which such payments were made to him. He was content

to keep perfectly silent about the matter and when he was

subsequently sued in court, to simply deny the existence of the loans

and challenge the other party to prove his claim.

[26]. As if it was not bad enough, having pleaded a negative or bare

denial defence, the Defendant then attempted during the trial to

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adduce evidence to show that the payments were purportedly

pursuant to a “business arrangement” and sought to adduce

elaborate explanation for such business arrangement. The learned

trial judge had dismissed the Defendant’s purported new defence on

the ground that “[T]he defendant, in his pleaded defence, denied the

existence of the friendly loan and put the plaintiff to strict proof of his

claim. There was no plea of an affirmative case, namely, that the

payments were made in furtherance of the financial arrangement. It

was therefore not open to defendant to pursue in argument an

unpleaded affirmative case”.

[27]. We entirely agreed with the finding of the learned trial judge on this

issue. As has been held in a number of case law authorities a

general plea “that the Plaintiff’s claim is denied and the plaintiff is put

to strict proof thereof” is not a sufficient traverse of the Plaintiff’s

claim. These authorities also show the need to adhere strictly to the

rule relating to pleading, the failure of which would attract serious

consequences (see: Lee Ah Chor v Southern Bank Bhd. [1991]1

MLJ 428 (SC) at 429D; UMBC Bhd. v Palm & Vegetable Oils (M)

Sdn. Bhd. [1983] 1 MLJ 206 (FC) at 206B; Kiaw Aik Hang Co. Ltd.

v Tan Tien Choy [1964] MLJ 99 (CA, Singapore) and RHB Bank

Bhd. v Kwan Chew Holdings Sdn. Bhd. [2010] 2 MLJ 188).

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[28]. For example, in RHB Bank Bhd. v Kwan Chew Holdings Sdn.

Bhd. (supra), the Federal Court, in holding that the respondent’s

cause of action against the appellant was for breach of contract and

not the Joint Venture Agreement, held at paragraphs 33 and 35 of its

judgment as follows:

[33] It is a cardinal rule in civil litigation that parties must abide by

their pleadings. This is trite as can be seen from the decision of this

court in Menah Sulong v Lim Soo & Anor [1983] 1 CLJ 26 where

Ong Hock Thye, CJ said:

I think it is necessary in this case to emphasize once again that the

courts should give their decision in strict compliance with the

pleadings. As Lord Radcliffe said in Esso Petroleum Co Ltd 6 Anor

v Southport Corporation [1956] 2 WLR 81 at p 91:

If an appellate court is to treat reliance as pedantry or mere

formalism, I do not see what part they play in our trial system.

…

[35] On this, we would like to add that it is not duty of the court to

invent or create a cause of action or a defence under the guise of

doing justice for the parties lest it be accused of being biased

towards one against the other. The parties should know best as to

what they want and it is not for the court to pursue a cavalier

approach to solving their dispute by inventing or creating cause or

causes of action which were not pleaded in the first place. Such

activism by the court must be discouraged otherwise the court

would be accused of making laws rather than applying them to a

given set of facts.

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[29]. In Lee Ah Chor v Southern Bank Bhd (supra), the Supreme

Court quoted with approval the following passage of Sharma J’s

judgment in the case of Janagi v Ong Boon Kiat [1971] 2 MLJ 196

at p. 197 which reads as follows:

A judgment should be based upon the issues which arise in the

suit and if such a judgment does not dispose of the questions as

presented by the parties it renders itself liable not only to grave

criticism but also to a miscarriage of justice. It becomes worse

and is unsustainable if it goes outside the issues. Such a

judgment cannot be said to be in accordance with the law and

the rules of procedure. It is the duty of the courts to follow the

rules of procedure to ensure that justice is done. These rules

are meant to be observed and respected. The faith and the

confidence of the public in the law, Constitution and the

government depends to a large extent on the way the

machinery of justice functions and it is the duty of those who

man that machinery to realize that what they do does not in any

way diminish that faith…

[30]. Now in a typical case where two versions are presented before the

Court, the Court’s role is of course to determine, based on the

pleaded case and the evidence adduced before it, which version is

more probable or plausible. Nevertheless, in the present case, with

the rejection of the new defence of “business arrangement” by the

learned trial judge, there was actually only one version of the Plaintiff

before the Court, i.e. that the payments were made in furtherance of a

Friendly Loan.

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[31]. Considering that this is a civil case where the burden on the

Plaintiff is only to prove his case on a balance of probabilities, the

learned trial judge ought to have held that based on the facts and

circumstances of this case, in the absence of any explanation from

the Defendant on the purpose of the payments, the Plaintiff’s version

that the payments to the Defendant were for the purpose of a Friendly

Loan must be true.

That the Notices of Demand were not corroborative evidence of

the Friendly Loan

[32]. In dismissing the Plaintiff’s claim, the learned trial judge had also

rejected the notice of demand issued by the Plaintiff in September

2011 as a contemporaneous document to prove the Friendly Loan on

the ground that it was written some two years after the last payment

was made and in likelihood with litigation in mind.

[33]. On this issue, the Plaintiff’s counsel had in his submission before

the High Court referred to the decision of this Court in the case of

Wong Hong Leong David v Norazman Bin Adnan (supra) in which

it was held that the fact that Wong had not responded to

Noorazman’s letter of 17 December 1991 with a prompt and vigorous

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denial tended to show that such an agreement did in fact exist

between them. This case, argued counsel, supported the proposition

that the failure of the Defendant in this case to reply to the Plaintiff’s

letter of September 2011 (and the Plaintiff’s solicitor’s letter of May

2012) amounted to an admission by the Defendant that the payments

were indeed in the nature of loans.

[34]. The learned trial judge disagreed with the submission of learned

Plaintiff’s counsel. He distinguished Wong Hong Leong David v

Norazman Bin Adnan (supra) from this case based on the facts.

This was stated at paragraphs 19 to 21 of his grounds of judgment

as follows:

19. In my judgment, whether or not a court should draw an

inference from the silence of a party must depend on the

particular factual circumstances of each case. The protean and

multitudinous nature of cases before a judge necessarily means

that no judge can be bound by a particular finding of fact by a

court that had preceded him or her. In Wong Hon Leong David

v Noorazman bin Adnan, the letter must have been written

within a period of not much more than three months after

the agreement, because the decision of the land

administrator was communicated on 16 September 1992

and the letter from Noorazman reciting the fact of the

agreement on the issue of access was dated 17 December

1991. To my mind, there was a reasonable degree of

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contemporaneity between the fact of the agreement and the

letter recording its terms.

20. In the present case, the amounts were transferred by the

plaintiff between the period of June 2008 to April 2009. The

plaintiff’s letter was written more than two years later, while his

solicitor’s demand was made more than three years after the

last transfer of the money. Both were, in all likelihood, made in

preparation for trial. Accordingly, in my view, the evidentiary

value of the silence on the part of the defendant is next to

naught.

21. As counsel for the defendant argued, there could have

been many reasons why the defendant had not replied, not least

the fact that he considered the demand so preposterous that he

did not wish to dignify it with a reply.

[35]. Plaintiff’s counsel submitted before us that the learned trial judge’s

view of the contemporaneity in the case of Wong Hon Leong David

v Noorazman bin Adnan was misconceived as the dates between

the date of application and the letter from the Respondent

(Noorazman) to the Appellant (Wong) on the terms of the fee

arrangement were definitely more than 1 ½ years and not 3 months

as held by the learned trial judge.

[36]. In fact, in that case Noorazman had undertaken his work to

secure the conversion approval sometime in January 1991 after the

agreement between the parties in respect of the fee payable. He

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however only wrote to Wong sometime in December 1991

confirming the Fee Agreement of additional work, to which Wong

did not reply. The letter from the Land Administrator approving the

application was dated September 1992. Clearly there was a time

lapse between January 1991 to September 1992, yet this Court held

that the failure of Wong to reply the letter with a prompt and

vigorous denial was corroborative of the existence of the agreement

to pay the fee, as alleged by Noorazman.

[37]. In this case, the Plaintiff’s letter requesting for the return of the

Friendly Loan was a demand that would have been made by any

reasonable person who had given a Friendly Loan and is well within

the limitation period.

[38]. It was further submitted that the learned trial judge had

misdirected himself when he held that the non-answering of the

letters of demand was not corroborative of a Friendly Loan as there

could be many reasons why the Defendant did not reply to those

letters.

[39]. The Defendant when giving evidence purported to explain why

he did not reply to the letters of demand in the following manner:

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“... I didn’t want to respond to the letter to go and pick an argument

with somebody saying something not truthful. All I know is the

relationship had soured and that we were broken off and I have

signed the Settlement Agreement. If anything on to us it must be on

the settlement agreement. It was not reflected in the settlement

agreement. Somebody writes you a letter one and half or two years

later calling this loans and if react to it and I’m leaving that person

room I don’t know where he is trying to drive it”.

[40]. It was submitted that it defies common sense that one would

choose to remain silent when a claim is made alleging a Friendly

Loan being given especially so when it is by a friend whom one has

had a soured relationship! The conclusion one can make is that it

was in fact true that the monies transferred from the Plaintiff and

received by the Defendant were a Friendly Loan. Further the

Respondent filed a Statement of Defence which was a mere denial

of the Plaintiff’s Statement of Claim.

[41]. It was therefore submitted that the learned trial judge erred in

refusing to accept the Plaintiff’s letters of demand as

contemporaneous documents as proof of the Friendly Loan.

Further, the learned trial judge also erred in his judgment in not

making any finding on the evidence of the Plaintiff that the Friendly

Loan was based on the oral request of the Defendant.

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[42]. We found considerable merits in the Plaintiff’s counsel’s

submission that the learned judge was plainly wrong in his finding

on this issue for the following reasons.

[43]. In rejecting the two notices of demand as contemporaneous

documents in proof of the Friendly Loan, the learned trial judge had

ruled that the letters were in likelihood written in anticipation of

litigation. However, the only reason given by him for saying so was

the fact the first letter (from the Plaintiff himself) was written some

two years and the second demand (from his solicitor) was some 3

years after the last payment.

[44]. However, to our minds that was not the real issue. What we are

really concerned with in the present case relates to ordinary and

normal human conduct, that is, how would a normal and reasonable

person in the Defendant’s position as an experienced and seasoned

businessman, faced with such a serious allegation that he owed a

huge sum of money given to him as loans, react in such a situation?

Would he remain silent and do nothing at all or would he react with

indignation to what he considers as a baseless demand and would

even immediately sign off a letter to not only deny the baseless

allegation but also to set the record straight on the real purpose for

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which such payments were made. The answer would have been so

obvious to the learned trial judge.

[45]. What was even more surprising in the present case was that the

learned trial judge had acceded to the Defendant’s counsel’s

submission that “there could have been many reasons why the

defendant had not replied” and was naive enough to accept the

explanation given by the Defendant to the effect “that he considered

the demand so preposterous that he did not wish to dignify it with a

reply” as a valid reason for not replying to the letters of demand!

[46]. Indeed, we were entirely in agreement with the Plaintiff’s

counsel that the Defendant’s explanation defies common sense and

logic and not in compliance with ordinary human conduct and his

explanation for his complete silence was a mere excuse and an

afterthought which had no probative value in law. The Defendant

should have been held to have admitted to the existence of the

Friendly Loan on this ground alone.

[47]. The Defendant’s counsel had submitted before us that the

Defendant is a man of means and there was no need or reason for

him to resort to getting loans from the Plaintiff. Be that as it may,

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unfortunately for the Defendant, Courts determine disputes between

litigants based not on their station in life but on their pleaded case

and the evidence they adduced during the trial.

[48]. In fact, the same argument was also put up by the defendant’s

counsel in Tan Aik Teck v Tang Soon Chye (supra) but it was

rejected by this Court based on the following grounds:

[3] The defendant claimed that he is a very rich man with

millions to his credit while the plaintiff is a poor man with no

means. Yet he admitted receiving the loan amount from the

plaintiff and banked it into his account.

…

[6] In my view, it does not matter whether the defendant was a

millionaire and the plaintiff was a pauper, the undisputed facts

remained that the plaintiff did issue two cheques amounting to

the amount claimed to be the loan and the defendant admitted

receiving those cheques and banked them into his account. As I

have stated earlier, it was for the defendant to explain to the

court what was the money for if it was not a friendly loan.

[49]. Indeed, as submitted by the Plaintiff’s counsel, at the end of the

day, the present case before us is a very simple case. That

payments had been made by the Plaintiff and received by the

Defendant was not in dispute. What was in dispute relates to the

purpose of such payments. The Plaintiff said they were for a

Friendly Loan while the Defendant at first denied they were loans

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and put the Plaintiff to strict proof but then on second thought during

the trial claimed they were pursuant to a financial arrangement,

which was rightly rejected by the learned trial judge as not his

pleaded case.

[50]. As rightly pointed out by the learned trial judge himself, in a civil

case the Plaintiff bears both the legal and evidential burden of proof

(see: sections 101 and 103 Evidence Act 1951). It is also trite law

that legal burden is imposed by law and remains with the Plaintiff

throughout the trial and never shifts to the Defendant. On the other

hand, evidential burden moves to and fro between the Plaintiff and

the Defendant depending on the state of the evidence introduced at

any one stage of the trial, and unless and until the Plaintiff

discharges his evidential burden by establishing a prima facie case,

there is no burden on the Defendant to prove his defence, no matter

how weak his defence might be.

[51]. Applying the legal principle governing the burden of proof in a

civil claim, we were in entire agreement with the Plaintiff’s counsel

that based on the facts and circumstances of the present case as

set out above, the Plaintiff was entitled to rely on the cases of Wong

Hong Leong David v Norazman Bin Adnan (supra) and Tan Aik

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Teck v Tang Soon Chye Tan (supra) as authorities for saying that

the Plaintiff had sufficiently discharged his evidential burden to

establish a prima facie case that the payments made to the

Defendant were for the purpose of a Friendly Loan and the burden

was shifted to the Defendant to prove, by admissible evidence

based on his pleaded case, that the payments were not made

pursuant to a Friendly Loan, which the Defendant had failed to

discharge.

That the Settlement Agreement did not allude to the Friendly Loan

[52]. In his judgment, the learned trial judge had earlier explained, as

part of the background facts, how the Settlement Agreement came

to be entered between the parties and they were these. The parties

were once friends, and together held shares in a number of joint

venture companies. They had a falling out and so they entered into

the Settlement Agreement on 10 August 2009, to document, among

others, the distribution of the assets of the joint venture companies.

[53]. The learned trial judge opined that while the Settlement

Agreement had meticulously dealt with not only the distribution of

the assets of the joint venture but also the apportionment of

liabilities, yet it did not deal with, let alone acknowledge, the

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existence of any outstanding loan from the Plaintiff to the Defendant

arising from the payments that were the subject matter of the

dispute. Therefore, the Plaintiff’s assertion of a Friendly Loan

existing between the parties could not be true.

[54]. In this regard, we were again in entire agreement with the

submission of the Plaintiff’s counsel that the learned trial judge

erred in making such a finding. As he himself had acknowledged at

paragraph 48 of his judgment, the Settlement Agreement was “to

deal with the distribution of the assets of the joint venture and the

apportionment of liabilities”. That such was the intention of the

parties could be discerned from clause 10 of the Settlement

Agreement which reads as follows:

Gerard wants to exit from the companies and business with Kasi

and the Pantai Group of Companies constitutes the major

business relationship between Kasi and Gerard. Both parties

have now agreed to amicably divide and distribute the assets

of the Pantai Group of companies referred…

[55]. Hence, the Plaintiff’s evidence that the Settlement Agreement

was in effect an agreement to settle the business dealings between

the Plaintiff and Defendant with respect to their joint-venture

shareholdings, division of business assets and existing

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loans/guarantees with financial Institutions was entirely consistent

with the intention expressed in Clause 10 of the Agreement.

[56]. The Plaintiff had also given evidence that the Friendly Loan was

given on a personal basis, there being a relationship of trust, as

admitted by the parties. Since the Settlement Agreement was

intended to address the issues revolving the joint-venture business

between the parties, the learned trial judge ought to have accepted

as reasonable the Plaintiff’s explanation why the Settlement

Agreement made no mention of the personal loans between the

parties.

[57]. We also agreed with the Plaintiff’s counsel that the learned trial

judge erred in relying on the Settlement Agreement as one of the

grounds for dismissing the Plaintiff’s claim as it has not been

pleaded by the Defendant. We were unable to accede to the

submission of the Defendant’s counsel that although the Settlement

Agreement was not pleaded by the Defendant in his defence, it had

been referred to the Plaintiff during the trial and the learned trial

judge was therefore entitled to rely on it to dismiss the Plaintiff’s

claim. We were of the opinion that the Settlement Agreement was

in exactly the same position as the defence of “business

27

arrangement” which was rightly rejected by the learned trial judge

as an unpleaded case and therefore not worthy of any

consideration.

Decision and Order

[58]. For the reasons stated above, we allowed the appeal with costs

and set aside the order of the High Court. We awarded agreed

costs of RM 15,000.00 to the Plaintiff and also ordered deposit to be

refunded.

Signed

(LIM YEE LAN)

JUDGE, COURT OF APPEAL MALAYSIA

PUTRAJAYA

DATED: 10 July 2017

28

For the Appellant:

Messrs. Kamales & Partners

Advocates & Solicitors

No. 25 – 5, Tingkat 5

Subang Business Centre

Jalan USJ 9/5Q

47620 Subang Jaya

Selangor.

For the Respondent:

Messrs. Abdullah, Ooi & Chan

Advocates & Solicitors

Lot 37-6, 6th Floor

The Boulevard Office

Mid Valley City

Lingkaran Syed Putera

59200 Kuala Lumpur.